Diwali fails to cheer Mumbai builders as houses remain unsold

The number of new units in the second-quarter was 9,900 compared to 11,300 units in the first-quarter.

The festive season failed to bring smiles to the realty sector as new housing units saw a 27% decrease in the second-quarter ended September 30, 2016 compared to the same period last year, according to the data compiled by Liases Foras, the housing research firm.

The number of new units in the second-quarter was 9,900 compared to 11,300 units in the first-quarter. In the second-quarter last year, the number stood at 13,649 units, the data showed.

One of the major reasons for the headwinds is that builders — who are saddled with an inventory of 2.40 lakh houses in Mumbai Metropolitan Region (MMR), including 80,000 in Mumbai — are concentrating on selling their unsold units instead of launching new ones. The MMR consists of areas such as Mumbai, Navi Mumbai, Thane and Raigad and is considered one of the prime real estate markets in India.

Liases Foras said that there are multiple other factors which have caused the slowdown.

“Builders are waiting for the new development plan (DP) and the Real Estate Regulation Act before launching projects,” said Pankaj Kapoor, CEO, Liases Foras.

“There is also an affordability factor as most buyers feel that prices are not productive enough to take a plunge. However, in the last few months, with builders giving discounts and offering schemes, we are seeing some sales taking place,” he added.

The unaffordable prices and the recent interest rate hike by the Reserve Bank of India (RBI) have contributed to the slump, experts said.

In addition, the RBI has laid down strict guidelines for banks to disburse housing loans, given their burgeoning non-performing assets.